Does the tenant have a choice to pay the option premium?

I had a couple of interesting questions today on the model that we use.

The first was: Does the tenant have a choice to pay the option premium?

And the answer is:
No. The tenant doesn't really have a choice about the rent premium. You are essentially helping them save for the down payment. If you don't charge them a premium that they can get back, they won't be able to save for the down payment. They also have much less skin in the game and, as such, may walk on you.

The second question was: If taxes and condo fees go up a year into the agreement, would you raise the payments to the tenants (who are in rent-to-own) or can you do that?

Answer:
In our model we pay the property taxes. So any increase there is ours to eat. As for condo fee increases, you could pass them on to the tenant. In all of the condo deals we have done we are talking about increases of $10 a month so we don't bother given the short ( 2 or 3-year) duration of the relationship. When you ask "can you do that?", know that you can do pretty much whatever you want as long as you don't contravene the Landlord Tenant Act. And the tribunal prefers not to get involved in lease option details such as deposit, rent premiums, and condo fees. (Tribunal assumes that the landlord is responsible for the condo fees)

--Bob Hudson AKA "Lease to Own" Bob